Didn’t get your tax refund? You may be a victim of identity theft

In a recently growing identity theft scam, the Federal Trade Commission reports that thousands of U.S. taxpayer’s social security numbers have been stolen, resulting in tax fraud and missing tax refunds.

The Federal Trade Commission has reported a jump in tax fraud complaints between 2002 and 2006: in 2002 they fielded 18,000 calls from taxpayers related to tax fraud. In 2006, the number of calls jumped to 50,000 calls.

For those who have experienced it, dealing with employment-related identity theft and social security number theft is a huge nightmare. A person’s social security number is central to many things including banking, credit applications and reporting, and taxes. If it is ever stolen and used, it can have a huge impact on someone’s life. Even if the theft is reported to the police, if someone steal’s your social security number, earns income on it and then never pays taxes, it can result in you losing your own tax refunds or even having to pay additional taxes on the thieves’ income!

Victimization of this sort can be extremely frustrating, especially since the IRS takes on average about a year to sort out who is the real taxpayer in cases of tax fraud. Some people don’t realize they are victims of identity theft for years, and usually find out when the IRS contacts them asking why they didn’t report the income that appears on the W-2 of the person who stole their identity. In the mean time, the victim’s tax account is frozen, which means even no refund, and the taxpayers waits, for months and months until the IRS sorts it out. Worse, the IRS does not prosecute theft of this sort, which can encourage thieves to continue committing fraud with stolen social security numbers, because in essence, they get a “free pass”.

IRS spokesman Dean Patterson spoke out against this and said in a written statement, “significant resources are being committed to address the challenges posed in protecting taxpayer’s identity information.” He goes further and says, “we have established a special unit dedicated to resolving tax issues incurred by identity theft victims and special tracking codes to monitor returns and prevent further fraud. Potential identity theft victims can contact the IRS if they suspect fraud.”

If you suspect you are a victim of tax related fraud, or that your social security number has been used to report fraudulent income, please contact your local Taxpayer Advocate Office. Their numbers can be found on the IRS website at www.irs.gove/advocate/index.html